There was a chart making the rounds over the last 2 weeks measuring the number of times US Google users searched for the word “recession”. It comes straight from Google Trends, a tool we regularly highlight in these pages.
This is the chart in question:
At first blush, this seems pretty scary – if so many Americans are googling “recession”, how long before this becomes a self-fulfilling prophecy? The peak level here was the week of August 11 – 17, which means the sudden drop in Treasury yields and global equity market volatility was likely the cause of Googler’s concerns. On the bright side, the last 2 weeks look calmer.
Except here’s the thing: not many people actually google “recession”; in fact, over the last year there are typically more searches for “Cartier”. And as much as we respect the “house that Louis built”, we are under no delusions that this is anything other than a niche luxury brand and unfamiliar to most Americans.
Bottom line: “recession” search volumes don’t mean much, unless one wants to equate their importance with the size of the population searching for Cocteau – inspired trinity rings and panther brooches. We do not place ourselves in that dubious camp.
Here is that chart:
To our thinking the right Google search term to worry about is “dow jones”, because the typical American consumer knows stock price volatility can presage an economic slowdown. When they see US equity markets take a drop, they google “dow jones” to learn more.
Here is a comparison of “recession” searches relative to “dow jones” searches back to 2004:
Three takeaways from this:
#1: Stock market volatility generates far more Google search interest than “recession”. The October 2008 equity market meltdown saw 4x the number of “dow jones” searches relative to “recession”. For the month of August 2019, that ratio is 7:1.
#2: Americans are increasingly paying attention to stock market volatility. This trend started with the February 2018 volatility storm; Google searches in this month were actually 44% higher than October 2008. Subsequent periods of stock market churn are getting even more attention, with December 2018 8% higher than February, and August 2019 Google searches 2% higher than December.
#3: We continue to worry that further equity market volatility will dampen US consumer confidence, an issue worth watching as we get closer to Holiday 2019. The Google Trend data shows ever-higher levels of concern whenever stock markets swoon. So far, that has not bled over to consumer spending most likely because markets have consistently recovered. That works, of course, until it doesn’t.
Our bottom line: Americans will never “talk themselves into a recession” on their own, but stock market volatility could still convince them one is coming. And that conversation has already started. It’s not too late to end it before it does lasting damage, but we’ll need several months of calm to unwind the recent spike in concern.